Financial literacy holds growing importance for managing assets/savings during the longer retirement period currently experienced in rapidly aging countries, which is most relevant to Japan. We examine levels and determinants of financial literacy as well as its association to asset allocation among middle and older generations of Japan using data from JSTAR (Japanese Study on Aging and Retirement) collected in 2009. We present some interesting findings. First, financial literacy is generally associated with educational attainment, cognitive skills, coursework in economics or finance, and income level. Second, financial literacy is associated with resultant asset allocation; individuals with higher literacy are more likely to invest in stocks or securities separate from their savings.